City wins appeal on ex-Macy’s building in fight over Kings arena site

The city of Sacramento today cemented its hold on the former Macy’s men’s store at Downtown Plaza, the last piece of real estate needed to build the new Kings arena, after an appellate court rejected an effort by the building’s owners to regain control of the property.

The decision by the 3rd District Court of Appeal lifts a legal cloud over the building, which has been vacant ever since Macy’s relocated it’s men’s department to its main Downtown Plaza location last fall.

Last month a Superior Court judge awarded control of the building to the city, which had filed an eminent domain suit against the building’s owners in January. The owners, a group of mortgage-certificate holders, took the fight to the Court of Appeal, saying their property rights were being trampled in the city’s rush to convert the site into the new Kings arena.

City officials hailed today’s ruling.

“I’d say we’re a little bit stoked about this,” said Assistant City Manager John Dangberg.

Assistant City Attorney Matthew Ruyak added, “We always felt all along that this was to be expected.”

There was no immediate comment from the building’s owners’ lawyer, George Speir.

Although the city brought the legal case to gain control of the property, the Kings will pay for it. The city filed suit because the Kings and the building’s owners were millions of dollars apart on price. Under the eminent domain process, a jury will set the sale price later.

City officials argued in court that they needed to gain control of the property this month to keep the $448 million arena project on track. The city wants to finalize a development agreement, complete its environmental reviews and sell bonds to finance the public’s $258 million share of the project by mid-May in order to begin demolition of the eastern part of the mall in June.

The arena is supposed to open in 2016. If the completion date slips beyond 2017, the NBA has the right to buy the Kings and move them out of town. That’s part of an agreement the team’s new owners made with the league when NBA owners blocked an effort by the prior owners, the Maloofs, to sell the Kings to a group from Seattle.

The owners of the former Macy’s building had argued that the city mishandled the eminent domain procedures and were only entitled to take possession of the land underneath the building. The city said that wasn’t true.

The Kings have already spent $36 million buying the rest of Downtown Plaza.

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